Global Human Rights Sanctions Regulations 2020

Question for Short Debate

Asked by

To ask Her Majesty’s Government what assessment they have made of the effectiveness of the Magnitsky-style sanctions issued under the Global Human Rights Sanctions Regulations 2020.

My Lords, I warmly thank all those noble Lords taking part in today’s debate.

The passage into law of the Global Human Rights Sanctions Regulations 2020, usually referred to as the Magnitsky Act, was welcomed by all parties. It was a bold affirmation of the values that we hold in common with other democracies that have enacted similar legislation. At a time of intensified geopolitical contest between democracy and authoritarianism, the Magnitsky Act underlines our readiness to sanction powerful figures in authoritarian regimes who abuse state power in pursuit of personal enrichment.

However, the credibility of such sanctions depends crucially on our willingness to apply them without fear or favour, whenever and wherever gross abuses of state power occur. If Magnitsky sanctions were perceived beyond our shores as penalties that we confined to Russian oligarchs, Chinese intelligence officers and Burmese generals, they would soon lose their power to deter unacceptable behaviours in the wider world. So I should like to take the opportunity today to draw noble Lords’ attention to an example of where our failure to contemplate imposing Magnitsky sanctions could render us vulnerable to the charge of double standards. The case that I will describe, on which I have corresponded with Ministers for eight years, arises not from a hostile state but from one with which this country enjoys cordial relations: Dubai in the United Arab Emirates, which I have visited many times.

Mr Ryan Cornelius is a British national. He has had his assets seized in state-enabled corruption. He has been tortured and imprisoned after a grossly flawed legal process. Ryan is a British businessman. In Saudi Arabia, he built the largest precision tunnelling company in the Middle East from scratch. From Bahrain, where he settled in the late 1990s, he went on to launch a range of ambitious construction ventures across the region. One of them, undertaken with several partners, was a major residential and leisure complex in a prime location in Dubai called the Plantation.

When the global financial crisis struck in late 2007, the investment company that was funding most of Ryan’s ventures told him that its line of credit from the Dubai Islamic Bank had been called in abruptly. The investment company was able to negotiate a restructuring agreement to repay its loan, which totalled some $500 million, over three years. However, the Dubai Islamic Bank made it a condition of signing that Ryan should stand as a guarantor of the agreement and pledge his business and personal assets as collateral. Ryan had little choice but to agree, but in any case his assets were comfortably worth more than the loan. The Plantation alone had recently been valued at over $1 billion by two leading international assessors.

Shortly after the agreement was signed, Dubai Islamic Bank’s chairman was removed and replaced by the man who remains its chairman today, Mr Mohammed al-Shaibani. Mr Shaibani is also chief executive of the ruler’s court, a position that gives him direct oversight of every arm of government, including the security police and the financial audit department. Mr Shaibani is also chairman of Nakheel, Dubai’s largest property developer.

My Lords, I congratulate the noble Lord, Lord Clement-Jones, on his initiative and on raising that rather alarming case. Perhaps it is a little early after one year, but it is surely right to review the operation of the regulations. I shall make three brief points in my three minutes.

First, I would welcome comment from the Government on the effectiveness of consultation between allies and the exchanges of information relating to the listing of individuals, on the extent to which the Government are prepared to listen to non-governmental organisations with expertise in this area, and on whether they are satisfied with the transparency of proceedings. Clearly, there is merit in examining, after one year, what is happening; there is merit, too, in yet again congratulating Bill Browder on the remarkable campaigns that he has led in the US, in Canada, in the Baltic countries and in the European Union and other international organisations —I am glad that Bill is on our side. I accept that lists need not be identical, but there is surely merit in co-ordination.

Secondly, I am puzzled by the fact that no serious Iranian officials have been listed. Surely there is a strong case for listing, for example, the individual responsible for shooting down the Ukrainian airliner or the individuals responsible for putting down the demonstrations in Iran in 2019. Is this for prudential reasons? Perhaps that is the only explanation that can be given for the Government’s approach to the Dubai individual mentioned by the noble Lord, Lord Clement-Jones.

My third observation is this: what does “effectiveness” mean in this context? How can it be measured, for example, in respect of individuals? In most cases, asset freezes and visa bans would not impact directly on the individuals who were responsible for torture. I think, for example, of the case of Sergei Magnitsky himself; one is concerned with listing not the individuals who carried out the torture in prison but those individuals further up the chain who were responsible for his treatment. It is unlikely that the small fry would have assets in the UK or would want to visit the UK. In my judgment, it is important to pass a clear message that these people are not welcome in the UK and other friendly countries and cannot salt their money away in our financial institutions.

My Lords, none of us has much time to say a great deal, but since I suspect that we are largely in agreement, across all parties and none, that the Magnitsky sanctions—in this jurisdiction now wrapped up in the Global Human Rights Sanctions Regulations—are a good thing, that may not matter.

I congratulate the noble Lord, Lord Clement-Jones, on drawing the case that he mentioned to our attention and on opening this debate so powerfully. It is important that the United Kingdom, no matter what our internal political differences and economic troubles may be, must never avoid imposing sanctions on individuals and Governments on grounds of mere expedience. The noble Lord, Lord Anderson, was right to mention Iran and the other matters that he drew to our attention.

I accept that any British Government’s foreign policy, which guides our Ministers, diplomats and international negotiators and thus affects the conduct of diplomacy, will need to anticipate and react to events outside our control. Whereas the conduct of government may be different in different countries, the need to abide by acceptable standards of conduct that do not ignore the rule of law or internationally accepted human rights cannot be compromised, must always be respected and is a universal requirement.

The torture of political prisoners in large, powerful countries, for example, needs to be responded to just as much as torture carried out in economically and militarily weak countries. The fact that we do or could sell more goods or services to a large country than a small one, while a superficially attractive reason and justifiable as realistic and nationally self-interested, to say and do nothing about the appalling behaviour of a large country’s leaders is, in the end, counterproductive and as morally acceptable as it would have been 200 years ago to prolong the slave trade.

Human rights abusers tend to be kleptocrats who thrive on the pain, suffering and stolen assets of the less powerful or politically inconvenient. If they use their ill-gotten gains and the laundered proceeds of crime to fill bank accounts or buy property here, we should recover those assets, tell the world that we have done so and return them to the victims of those crimes.

Like all noble Lords and everyone concerned to do something about human rights violations and corruption, I strongly support the Magnitsky-style sanctions. Rather than simply condemning wrongdoing with words, they bring home to perpetrators the consequence of their actions. They also have the advantage that a whole population does not have to suffer, and they allow for the necessary political relationships to continue, even with odious regimes. But how effective have these sanctions been? This is why the Motion in the name of the noble Lord, Lord Clement-Jones, is so welcome.

I recognise that the legislation on these sanctions is relatively recent and that sanctions take some time to really have an effect, but I very much hope that the Minister will be able to provide some indication of their effectiveness. It is difficult to find out from other sources what their impact has been and whether they are indeed having any real effect. Obviously, we hope that, first, those guilty of human rights abuses or gross corruption will desist from any more criminal activity. We also hope that such sanctions will prove a deterrent to other potential abusers of rights or those engaged in corrupt financial practices. These are the real goals; indeed, they are the justifying purpose of such sanctions in the first place.

I recognise that answering the question of the effectiveness of sanctions in relation to those two purposes is obviously very difficult. However, it may be that the Minister is able at least to indicate how the sanctions are working in practice: has the freezing of bank accounts, for example, been effective in the sense that it has been done in a way that has stopped the person finding a way of transferring much of the money out of the account just before it was closed? Criminals have an army of people trying to find a way around any legislation that hampers their activities. Regarding the refusal of travel visas, I wonder how many people listed for sanctions have tried to enter the UK and have been turned back or have applied for visas and been refused them.

My Lords, I too agree that there are occasions when these Magnitsky sanctions may be the best available option to us. However, the increased use of such sanctions is a worrying sign that the organs of international arbitration such as the UN or the ICJ may be losing their effectiveness. These were the very institutions established in response to the tit-for-tat foreign policy that defined the 19th and early 20th centuries, with all their resulting catastrophes.

Our Government are a big advocate of the concept of “Global Britain”, an ambiguous phrase that sometimes means leading as a force for good in the world but at other times is simply a declaration that Britain is open for international business. My concern is that these conflicting visions of global Britain are sometimes mutually exclusive, and that when dealing with human rights abuses there may be a tendency to take the route of least domestic economic disruption.

Magnitsky can even play into this tendency, allowing us to feel that we have acted morally without incurring any costs and often failing to improve the situation. For example, I am not aware of any evidence that the sanctions placed on Chinese officials linked to Uighur human rights abuses have improved the situation in Xinjiang province. Our annual £80 billion total trade with China remains undisrupted. Harsher sanctions were placed on Belarus for the forced landing of a flight and subsequent arrest of a journalist—compared to China’s systematic programme of sterilisation, detention and re-education of the Muslim Uighurs. It is not insignificant that Belarus accounts for less than 0.1% of UK trade, compared to 6.8% for China. Is it not time for the Government to be honest and admit that the pursuit of global trade and investment opportunities can sometimes clash with their obligation to protect human rights? In other words, when it comes to global Britain, the Government cannot have their cake and eat it too.

My Lords, I too thank the noble Lord, Lord Clement-Jones, for securing this helpful debate.

I accept that this human rights sanctions regime marks a major positive step in our ability to identify and punish human rights violators. Along with the more powerful US Global Magnitsky Act, it amounts to an ability to cut off those targeted from two of the most important financial systems in the world. Dominic Raab rightly described it as having the potential to prevent human rights violators from being

“able to launder … blood money in this country”.—[Official Report, Commons, 6/7/20; col. 663.]

It is the role of your Lordships’ House continually to remind the Government of this potential and to point out where, against that ambition, more needs to be done.

I agree with the advocacy of other noble Lords, particularly my noble friend Lord Collins of Highbury, who argue that obvious human rights violators from Xinjiang, Myanmar and Belarus, for example, should be added to the list of those punished by these sanctions. Otherwise, human rights violators will be able to launder blood money in this country.

However, my main point is that these measures are less effective than they could be in respect of those targeted by them already. They were announced on 6 July 2020. Within days, parliamentarians and anti-corruption campaigners, drawing on research by openDemocracy, were warning that their full potential would be impeded by known and unaddressed deficiencies in the existing anti-money laundering regulations on which they rely.

Data from openDemocracy revealed that the UK’s AML systems were insufficient to prevent financial crime in the UK, and have enabled around 400,000 companies to evade declaring their “persons of significant control” and thus concealing their ownership structures. Those involved in illicit activities can structure their companies to take advantage of the 25% PSC ownership threshold to avoid declaring their interest at all. At the same time, others rely on a reported lack of enforcement of the requirement to disclose their PSCs.

My Lords, I thank the noble Lord, Lord Clement-Jones, for securing this important debate and for raising the shocking case that he outlined. I also pay tribute to Sergei Magnitsky, who was murdered in a squalid Russian prison cell 12 years ago. He was a brave and incorruptible accountant and lawyer who was targeted and eventually killed because he exposed a huge tax fraud involving senior Russian government officials. He had been hired on behalf of the human rights campaigner William—or Bill—Browder, to whom I pay tribute for leading a campaign that has resulted in Magnitsky legislation being passed in countries around the world.

There is no doubt that London is one of the main destinations for money looted in Russia and elsewhere. According to a 2016 report by the House of Commons Home Affairs Committee, £100 billion is laundered through the UK’s banks each year. Four years ago, I introduced in the Commons a Bill to introduce Magnitsky sanctions in the UK, and I am very pleased that the Government, led by the Foreign Secretary on this issue, have taken action since. However, today I will raise two shocking incidents.

The first is Lukashenko bringing down a passenger plane to kidnap a leading opposition journalist, Roman Protasevich, and the second is the poisoning and arrest of Alexei Navalny in Russia. Both of these incidents caused shock and outrage when they happened and everybody demanded some type of reaction, but here we are, months later, and the shock and outrage has diminished to indifference. In looking at what we could do, it has become clear to me and many others that Magnitsky sanctions are a tool that work but only when they are applied to the right people. In the cases of both Lukashenko and Putin, Magnitsky sanctions need to be applied to those who have provided financial support to these regimes. Before he returned to Russia, Alexei Navalny published a list of people he thought should be sanctioned if anything were to happen to him, and I ask the Minister today to set out what assessment the Government have made of that.

My Lords, I agree with the principle of Magnitsky sanctions but have concerns about the implementation. Why? First, we need to remember the vast difference between war crimes and human rights. The European Convention on Human Rights, upon which the British Human Rights Act is based, is wholly inappropriate for application in combat and battlefield conditions. The law that should operate in such circumstances is the law of armed conflict, otherwise known as international humanitarian law.

Secondly, on the evidence, I listened with care to the noble Lord introducing the debate today, and it was a classic case of reliable evidence from known sources over a long time. However, that is not always the case. My understanding of the basic tenet of criminal law—I am not a lawyer—is that you have to know the identity of your accuser, the explicit detail of the evidence and the source of that evidence. That was relayed today, but that has not always been the case.

Thirdly, on imposing sanctions, I looked at some research work that has been done—there is a fair amount of it. The indication is that somewhere between 5% and, at the most, 30% of sanctions result in a desired change, so they have to be seen as a tool of last resort, one to be used when all other tools in the diplomatic toolbox have proved ineffective. I question whether sanctions should ever be used against democracies. Moreover, they are far more likely to affect ordinary citizens than any leader or any other individual being targeted. At a time when we in this country are talking about global Britain and look forward to forging new partnerships in the backdrop of Brexit, we should not rely on sanctions as a tool.

Finally, we should make sure that our own stable is clean. Three years ago, I read the report—and I have it here—from the UK Parliament’s Intelligence and Security Committee, published in June 2018, entitled Detainee Mistreatment and Rendition: 2001-2010. Frankly, I am shocked and appalled that my country should not only condone torture and extensive mistreatment of prisoners but actually in certain cases instigate it. To me as a senior politician with 47 years in Parliament, whatever the threats may be, such practices are totally unacceptable.